Supreme Court Refuses To Hear Drug Antitrust Case

On June 26, the Supreme Court refused to hear a Federal Trade Commission antitrust suit that challenges the legality of a drug-marketing deal between brand-name pharmaceutical giant Schering-Plough and generic drug firm Upsher-Smith.

In 1997, Schering paid Upsher $60 million to delay marketing a generic version of Schering's potassium supplement drug K-Dur 20 until 2001. The FTC challenged the legality of Schering's payment but lost the case last year in federal district court. It appealed the case to the Supreme Court, and in an unusual move, the other federal antitrust regulatory agency, the Justice Department, objected.

Such deals involving exclusion payments are happening more often in the pharmaceutical industry, the FTC reports. From the late 1990s through 2004, no such payments were made. But three exclusion payments were made in fiscal 2005, and seven so far in fiscal 2006 (C&EN, May 22, 2006, page 32).

On the same day the Supreme Court announced its decision, four members of the Senate Judiciary Committee, including Sen. Herb Kohl (D-Wis.), introduced legislation to outlaw exclusionary settlements between brand-name and generic companies. "These companies are playing fast and loose with antitrust law and are padding their profits by forcing families and the federal government to pay far more than we should for prescription drugs," Kohl says. "This has got to stop."

FTC Commissioner Jonathan D. Leibowitz has vowed to continue challenging these deals. "Obviously, we're disappointed that the Supreme Court chose not to accept Schering," he says. And he hopes that "the Commission can bring another case involving these anticompetitive settlements between brands and generics—one that the Supreme Court will take."